Milburn accused of fabricating row with Chancellor

Alan Milburn was at the centre of a dispute over political "posturing" last night after reports suggested he was planning to set up 50 foundation hospitals before the next election. Relations between the Secretary of State for Health and Gordon Brown appeared to be strained. Mr Milburn was accused of "fabricating a row" with the Chancellor.

Claims that he was planning to expand the number of foundation trusts beyond the 12 originally envisaged by the Department of Health were dismissed by senior Whitehall sources as "more about posturing than policy".

Proposals for the trusts, which will be independent of central government control and given freedom to borrow money, sparked a very public row between the two men in the autumn. Mr Brown eventually insisted that any borrowing by foundation trusts would be counted on the Treasury's balance sheet.

Yesterday sources close to both men insisted there was no dispute over foundation trusts. Mr Brown's aides said he had not set a limit on their numbers. Mr Milburn has repeatedly argued that all trusts should eventually have the chance to gain foundation status; Mr Brown has publicly supported the policy.

But there was clear irritation in the Treasury over the reports. They come after a joint press conference last week given by Mr Milburn and Charles Clarke, the Secretary of State for Education, which was widely interpreted as a snub to the Chancellor.

The Department of Health said it could not say how many hospitals were likely to become foundation trusts. Forty-six trusts are eligible to apply to become part of the first wave of foundation hospitals this year.